Network Society and Organizations

Conceptual Overview

Rather than attempting a definitive theoretical expression of what a network is, Anne Wallemacq has investigated how it is actually used in everyday life. She found that these definitional problems may be useful in some respects. In an empirical study of an avowed network organization, Wallemacq found that nobody in the organization knew exactly what the word meant but, despite this, it was used frequently in everyday speech. Wallemacq found that the term was used almost as if it possessed magical powers, there being an unusual pause before it was uttered and it being repeated like an incantation. She remarked that its function in the organizational discourse was less representational, and more evocative, almost as if it were a spell that could bring something into being. The lack of clarity in the use of the term did give rise to a certain amount of anxiety and frustration within the organization; however, it also opened up space for flexibility and a degree of experimentation with the organization structure and its rules.

In The Rise of the Network Society, Manuel Castells claimed that toward the close of the 20th century, network forms of organization had began to transform the social landscape, including political organizations, business enterprises, and communitybased groups. In 2000, he named Cisco Systems as the example par excellence of the network enterprise. The previous year, Cisco Systems had provided about 80% of the world's Internet hardware, by far the world's largest supplier of such equipment. With the explosive growth of the Internet, the market capitalization of Cisco Systems grew more than 2,000% over a span of only 5 years, reaching a value of $220 billion in 1999. The following year, this more than doubled to $550 billion, making Cisco the most valuable company in the world at that moment. The company itself professed to follow a “networked business model,” demonstrating that networks are a means of production at the same time as being the end product of the business. One example of how it exploited the new IT networks is through customer orders, where in 1999 Cisco was handling 83% of these orders online. Cisco pioneered the use of the Web in dealing with all aspects of its value chain, including its global network of customers, employees, and suppliers. Castells also observed that though these kinds of innovations may have been first exploited in the high-tech companies that developed the technology, they were soon exported to other industries. The Fordist model of big business is now being replaced by what Castells has characterized as the “Cisco model.” Even Ford itself [Page 972]has been transformed by IT networks, as explained by business guru Michael Hammer, who extols the use of computer networks to re-engineer corporations.

...